Data Will Overtake Oil

The following is a guest post by ChopDawg.com, an award-winning app development company that has worked with over 180+ startups and companies from all around the globe, helping them bring their web apps, mobile apps, wearable apps and software ideas to life.

The world economy has drummed on along with oil as its lifeblood for over 100 years.

Oil is directly responsible for about 2.5% of world GDP, and it accounts for 33% of the energy that we use!

And that is cheating because we haven’t included natural gas in the equation. Now it accounts for over HALF of the world’s energy supply.

So yes, even with all of the interest in renewables now, it’s still easy to see that the world revolves around oil.

Oil is still the king of running our lives. But dynasties don’t last forever…

Oil can run our lives; data can take over our lives. But data can and will run our brains.

(Sources: World historical oil production from 1950 to 1964 is from Rutlege (2008); world oil production from 1965 to 2015 is from BP (2016).

Erix Yu, group Vice President of Applied Materials and President of Applied Materials Taiwan, recently had an interview with Digitimes. In the interview, he likened data to crude oil.

Data must undergo further processing before they can be utilized to generate tremendous economic values regardless of the sources they are collected from, just like underground oil that has to be exploited, extracted and refined into fuel oil or plastic materials to generate huge rewards.

Such advancements will enable AI, big data and even VR/AR applications to become the next wave of growth drivers, which will combine to bring drastic changes to human life and subvert the development of industries

What does this tell us?

To me, it’s that oil’s days are numbered – maybe the next few decades. Or sooner if it turns out we underestimated AI. But this is also based on the principle that data become equivalent to a natural resource.

The energy that data consumption takes up will also outpace oil production at some point. Just look at the energy consumption that Bitcoin alone has caused:

The rise of standard oil yesterday, the rise of data companies today to dominate tomorrow.

By the time John D. Rockefeller died in 1937, his assets had equaled 1.5% of the United States’ total economic output. In today’s dollars, owning 1.5% of the total economic output would be equivalent to 340 billion dollars

Bill Gates is worth only $86 billion dollars.

Rockefeller’s Standard Oil dominated the oil industry in many ways. It was all about how Rockefeller’s trust streamlined production and logistics, lowered costs, and undercut competitors. And during its time of massive growth, Standard Oil was also accused of using aggressive pricing to bury competitors and form a monopoly that threatened smaller businesses that dared to compete.

Sound familiar?

Almost everyone is getting into the data business, but there are a few firms that will have the world’s largest amounts of data. These are the Big Five that will be taking over the storage of data.

1. Facebook
2. Amazon
3. Alphabet (Google)
4. Microsoft
5. Apple

They are the five most valuable listed data firms in the world. Collectively, their profits are surging: they have earned over $25 billion in net profit in the first quarter of 2017. If you are an American, Amazon captures half of all your dollars (most likely). Almost all the revenue growth in digital advertising in this country last year is accounted by Google and Facebook.

The unstoppable growth of both social media and the Internet of Things presents increasing privacy challenges for consumers, says Mikko Hypponen, F-Secure’s Chief Research Officer. Businesses that rely on collecting and monetizing data are gaining ever-increasing access to users’ lives.

“I believe data is the new oil,” says Hypponen. “And just like oil brought us both prosperity and problems, data will bring us prosperity and problems.”

Like oil before it, data is becoming a commodity – that commodity isn’t just you, but you’re a big part of it.

Thinking about the idea that private companies have collected more data about each of us than we know ourselves and sell it to strangers made me think. Oil is a resource that we have extracted from the Earth; it is sold as a commodity for various purposes. But it’s extracted from the Earth only.

With data, it can be extracted from many places. The suppliers of data are infinite. Human beings figure into just one part of it. Imagine when machines can learn to the point that they are also a source for data.
We produce today more data every year than all previous years combined. Primarily, this is being driven by the worldwide adoption of mobile devices.

If data is the next oil, AI will transform electricity.

It’s important to remember that AI exists on a spectrum – from self-driving cars to facial recognition, to even the simple-seeming tasks such as your phone completing your thoughts when texting.

Artificial intelligence already powers many of our interactions today. When you ask Siri for directions, peruse Netflix’s recommendations, or get a fraud alert from your bank, these interactions are led by computer systems using large amounts of data to predict your needs.

Electricity changed ways of life around the world. It disrupted transportation, food production, healthcare, you name it. AI is going to have a similar impact. Right now, AI decides whether we’re approved for a bank loan. And we’ve just scratched the surface of AI’s capabilities. For AI to exist, companies need to feed their algorithms vast amounts of data, which isn’t always readily available. But the more data becomes available, that’ll change.

Humans will feed algorithms what they need to know – human behavior, while unpredictable at an individual level, is predictable at mass scale. This happens without our consent and without knowing when and how it is used.

All of these companies just want money, and data allows them to be much more direct in the ways they can monetize. Advertising on TV, billboards, all forms of speaking to different perceived demographics used to be the way to do this. But each of those forms of advertising has a finite amount of influence because they can only dig so deep into human behavior.

How much do you depend on Google for search?

How many times do you log in to Facebook?

Has Amazon become your sole resource for one-day delivery?

Whether you are sitting in traffic, going out to get groceries, or browsing online, virtually every activity that you do creates a digital trace. This is what I consider to be the raw material comparable to oil in value. As your devices begin to connect to each other, this raw material increases in volume. I’ve heard estimates that a self-driving car will be able to generate 100 GB of data, per second.

We need to know what is being done with our data…

Artificial intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict anything from when a customer is ready to buy to when a person is at risk of a disease. Industrial giants such as GE and Siemens now sell themselves as data firms.

Trust and transparency are the economic enablers in the information age…

1. One key to transparency is to understand what types of data should be released as open data. Open data can be accessed and used by anyone to innovate and isn’t just owned by one or a few big firms. The ability for anyone to reuse data gives the opportunity for competitive advantage to all and opens up opportunities for education.

2. We need to support platforms that enable public control over its own data while retaining privacy. Blockchain, TBL Solid, and CloudInsurance are a few examples of this.

3. And it also takes personal responsibility. Will data mean the end of “free will?”

With greater understanding of what is being done with our data, we can enjoy its benefits.

Ignoring the positives out of fear can also be unproductive. Fear isn’t the answer, but awareness. One advantage? The world economy has opened up.

We now enjoy incredibly effective means for finding virtually any product from pretty much anywhere in the world. Minimal effort is required on the part of the user, and because of this access, anyone in the world can charge for something at a competitive price.

Amazon’s revenues may make up half of Americans’ spend online, but when measuring this in the new data economy, more variables need to be taken into account. In fact, it’s an irrelevant measure because it doesn’t take into account how the global economy has opened up. Since Internet traffic, monetary payments, and physical shipping are all global, sellers from all over the world can benefit from data collection. While Amazon is undoubtedly hellbent on global domination, it only exists because it does not try to control the billions of sellers and shoppers from around the world that get so much value from the network it has built.

We have the power to choose what data we give, and what we choose to keep to ourselves.

In many ways, data companies are not ruling us by force.

We provide them with our data for the sake of comfort and to receive services that are free on the surface.

And many of these benefits are incredible – the world has been opened up to us at our fingertips, and we hardly spend a penny to receive most services. We need to acknowledge the freedoms that we have gotten from being able to communicate to anyone so openly around the globe. I can’t think of any other generation that has had so much access to information and the ability to communicate with anyone so easily.

But always read the terms of service for any of these services that you are using. Understand what is being recorded so that you can adjust your behavior accordingly.

The emergence of the Blockchain will usher in a new level of personal protection.

We’ve had to trust the likes of Google, Amazon, and Facebook to protect our data from hackers and other companies. But in a few short years, we won’t need to trust Facebook with our photos because we will be able to share them with our network on an application interface that runs on a distributed network around the world. This distributed network will make sure that no one individual or company will have the key to our data. Except us. That is the hope.

Blockchain has incredible implications for how we exchange money with anyone from around the world – it’ll be much more direct. Right now many of us give it to the school who in turn passes it on to the milkman. But thanks to blockchain we’ve just hit puberty and left school. We can now give our money, instantaneously and directly to the milkman, even if the milkman is on the other side of the world.

With data comes responsibility – and if we are careful, it will lead to a better life.

In an interview with the Harvard Business Review back in 2014, Alex “Sandy” Pentland, the Toshiba Professor of Media Arts and Sciences at MIT, says that we need to define the ownership of data. He calls it the New Deal on Data.

On the New Deal of Data:

It’s a rebalancing of the ownership of data in favor of the individual whose data is collected. People would have the same rights they now have over their physical bodies and their money.

The New Deal would give people the ability to see what’s being collected and opt out or opt in. Imagine you had a dashboard that showed what your house knows about you and what it shares, and you could turn it off or on. Maybe there’d be some best practices concerning that data. Then people wouldn’t get so flipped out, because they’d know what was going on and why it was going on, and they could control it.

Transparency is key. The data being recorded about you will form a fairly complete picture of your life. You need somewhere to store and manage it, because it’s very valuable when it’s together in one place. Seeing all the patterns of your life allows you to personalize medicine, personalize insurance, personalize finances. The question is, Who’s going to hold the complete picture? Some credit-rating service? I hope not. Google? No. Is it going to be the individual? I hope that’s the way we end up going.

It’s ideas like this that make me hopeful that even though big data has the potential to be exploited in the wrong hands, individuals will rise and take back ownership of their data. It’s not going to be easy, as there are a lot of players in this game, but I’m hopeful that by demanding for transparency, data can make our lives a whole lot better than oil ever did.

Since being founded in 2009, ChopDawg.com has worked with over 180+ startups and companies from all around the globe, helping them bring their web apps, mobile apps, wearable apps and software ideas to life. If you have a great app idea and need an award-winning team to help build it, reach out to ChopDawg.com for a free quote and consultation, without any obligation!